Blockchain-based asset trading platform

Blockchain-based asset trading platform

Short answer questions

Please briefly describe the technical problems you are trying to solve.

What key role does the trading network play?

Explain the special significance of the genesis block and how it enhances the security of the system.

Describe how users can exchange assets in this system and explain the significance of atomic swaps.

Explain the concept of "token burning" and its role in asset redemption.

Briefly describe the cross-custodial net settlement process and explain its advantages.

Explain how the system implements pre-trade credit checks.

What types of orders does the system support? Give examples.

Briefly describe the functions of the virtual custody module and explain its relationship with atomic swaps.

Explain how the system integrates with decentralized exchanges.

Short answer questions

Aims to solve the inefficiencies and security risks in the existing market infrastructure, especially when it comes to trading different types of assets (such as fiat currencies and cryptocurrencies). The system provides a secure, transparent and efficient asset trading solution by leveraging blockchain technology and atomic swap mechanisms.

The trading network plays a vital role in this system. It is responsible for signing the genesis block of each blockchain ledger, establishing an initial trust foundation for the system and acting as a barrier to prevent malicious nodes from entering. In addition, the trading network also acts as a customer trading platform to facilitate asset exchanges between customers.

The genesis block is the first block of each blockchain ledger, and its special feature is that it is signed by the trading network to ensure its authenticity. This signature mechanism effectively prevents malicious nodes from forging ledgers and enhances system security.

Users reach a transaction agreement on the trading network and use the atomic exchange mechanism to exchange assets. Atomic exchange ensures that both parties to the transaction transfer assets at the same time, avoiding the risk of default by either party and ensuring the fairness and security of the transaction.

Token burning refers to the process of permanently removing tokens from circulation. In asset redemption, token burning is used to update the corresponding blockchain ledger to reflect that the user has exchanged the token for the actual asset and no longer holds the token.

The cross-custodial net settlement process refers to the process of simplifying the settlement process by calculating the net amount to be settled by all users in each asset class in transactions involving multiple custodians. This process reduces the number of actual asset transfers, reduces transaction costs, and improves settlement efficiency.

The system implements pre-trade credit checks by accessing the user's unspent transaction output (UTXO) dataset and calculating the sum of their on-chain assets to ensure that the user has sufficient funds to trade.

The system supports multiple order types, including limit orders and market orders. For example, a user can submit a limit order to buy 1 Bitcoin, specifying a maximum purchase price, or submit a market order to buy it immediately at the current market price.

The virtual custody module acts as a bridge between smart contracts and the custody module, facilitating atomic swaps using smart contracts, allowing users to safely trade assets stored in smart contracts.

The system integrates with decentralized exchanges by injecting liquidity into decentralized exchanges and extracting liquidity from them. The system also supports atomic swaps between blockchain smart contracts and custodial distributed blockchain ledgers, ensuring that transactions are secure and efficient.

Glossary

Blockchain A decentralized, immutable, distributed ledger technology used to record transactions. Genesis Block The first block in a blockchain. Atomic Swap A mechanism that ensures that both parties to a transaction transfer assets at the same time. Tokens represent cryptographic units of digital assets or utilities. Token Burning The process of permanently removing tokens from circulation. Custodian An entity responsible for the safekeeping and management of client assets. Cross-custodial netting Simplifies the settlement process by calculating the net amount to be settled in transactions involving multiple custodians. Blockchain node Participating computers in a blockchain network. Consensus algorithm The mechanism used in a blockchain network to reach agreement on the order of transactions. Smart contract A self-executing contract that is stored on a blockchain and executed automatically. Distributed ledger A database that is replicated and synchronized across multiple nodes. Unspent transaction output (UTXO) An unspent output from a blockchain transaction that can be used for future transactions. Public key cryptography A cryptographic system that uses public and private keys for secure communication and transaction verification. Decentralized exchange (DEX) A cryptocurrency exchange that does not rely on a centralized institution to conduct transactions.